Criminal activities have increasingly utilised fake document or document forgery, resulting in billions of dollars being lost by the global economy each year. Countless reasons drive the creation of counterfeit documents, such as obtaining loans beyond their eligibility, buying or selling properties, acquiring loans, evading arrest, or staying in a country illegally.
Even a few years ago, the number of identity frauds was less mainly because the customer onboarding usually happened in a physical location, mostly in the branches of the financial institutions. Now that almost all the industries support online onboarding of new customers, it has become easier for fraudsters to fake document, making it challenging to detect forged documents and recover loans from defaulters.
Prevent Frauds At The Root: Steps to Identify Fake Documents
The percentage of document fraud is more common in financial institutions like banks and NBFCs since they provide almost all core features like new customer onboarding, issuing loans, buying and selling financial products online, making it easier for the fraudsters to forge the documents. To counter the document fraud, financial institutions are now forced to invest in smarter technologies during the KYC and onboarding stages.
Below are important tips to detect and prevent document fraud.
1. Use Microscopic Scanners for texture analysis
Using microscopic scanners for texture and data inconsistency analysis will help in identifying forged documents and black stolen documents.
a. Forged Documents
Fraudsters forge documents by making changes to existing documents. They can make simple changes, such as altering the date of birth or expiry date, and they can also make complex changes, like modifying the complete address of the holder, including false watermarks, or inserting genuine pages from another original document. To accomplish this, fraudsters utilise special scrubbers to erase the original information and replace it with new information.
In the case of property documents or agreements, fraudsters can easily add or remove critical information. Adding new information typically occurs towards the end of the document, where there is unused space. Typically, the new information includes additional clauses that favour the document holder. On the other hand, removing information is achieved using a special whitener and can be done at any part of the document.
To detect document tampering, it is beneficial to employ an advanced microscopic scanner for data integrity analysis. This scanner helps identify variations in the texture and density of the fonts used throughout the document. If inconsistencies in the texture and density of the ink are detected, it becomes evident that the document has been tampered with.
b. Blank Stolen Fake Document
All original documents start blank before they are personalised. Fraudsters attach the supply chain of the document, procure the blank documents and fill in false information. These kinds of fraud involve heavy coordination among the fraudster network and are very difficult to identify at the first sight. However, fraudsters cannot replicate every single piece of information including specific security marks, watermarks, stamps that are unique to every document. Using such a technique fraudsters can even prepare a bank statement.
Advanced microscopic scanners can be used for any text inconsistency. As soon as any inconsistency is spotted, the document can be investigated further for any data inconsistencies like the placement of specific text like date of birth, date of expiry, date of origin, etc. in the document.
2. Use Advanced Visual Authentication techniques
Advanced visual authentication techniques to scan specific security features, stamps, watermarks will help in identifying counterfeit documents, compromised or sample documents, and camouflaged documents.
a. Counterfeiting Original Identity
While modified documents are false original, fake document may be false creations. Counterfeiting identity is one of the most common document frauds. In this, the fraudsters use a template of the original document and fill the details as they need, making the final document resemble almost original. To the naked eye, the documents look original. Though on further investigation, most of these fake documents lack the security features unique to those ID documents.
During the KYC stage of customer onboarding, people usually counterfeit original identities. Therefore, instead of rushing the onboarding process, if the onboarding software scans the document for specific security features, it can easily reveal that the document is fake.
b. Compromised or Sample Documents Misused
Fraudsters steal a lot of government-issued identities and other legal documents that they find as samples in public spaces like the internet, presentations, etc. They then insert specific information into these documents to make them look like the original.
Visual document authenticity techniques can help identify font anomalies, digital tamperings such as modified ID photos or tampered pixels, etc., when searching for specific security information.
c. Camouflage Documents or Fantasy document
If you see any unknown places like Utopia, misspelt places like Griece, etc. in a document, it is clear that the document is camouflaged. Fraudsters use such tricky words which are very close to the original to tag false issuing authorities in the document. It is very easy to slip these obvious fake entries.
Using advanced visual document authentication techniques and comparing with an authorised list of countries, states, issuing authorities, etc. will help in identifying these frauds.
3. Live Identity Verification
Live identity verification techniques like selfie photos or live video chat will help in preventing frauds committed using fraudulently obtained documents and imposter documents.
a. Fraudulently Obtained Document
This is a tricky category of fraud in which the fraudsters use somebody else’s stolen photo and use it in their original document. Verifying this kind of fraud requires utilising proof of ownership techniques, such as having the document holder capture a live photo using the verification device and comparing it with the photo in the document.
b. Imposter Document
This category of fraud is precisely as it sounds. A fraudster steals somebody else’s identity document and uses it as it is. The imposters can quickly get through the gates if the KYC process is strong. The best way to prevent these kinds of fraud is to make the document holder get into a live video chat and let the document collector take a photo of the application and verify it against the image in the application form.
Finezza’s lending and onboarding solutions, combined with a bank statement analyser, can help your institution identify fraud or fake documents and take the proper proactive measures. The document identification framework provided by Finezza can enable you to validate documents like Aadhar cards, bank statements, GST returns, cheques, photos, balance sheets, etc. and tag all data points. Besides, it also facilitates automated extraction of data without the need for any manual intervention to speed up the entire process.
Don’t let ID and document fraud prevent you from delivering a faster turnaround and a streamlined onboarding experience. Learn more by contacting us at Finezza about preventing the submission of fake documents and validating your loan applicant’s lending profile.
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